A WELSH council is considering dismissing its entire workforce and re-employing them on new terms, it emerged last night.

Neath Port Talbot council, which employs more than 7,000 people, has been locked in lengthy, and so far unsuccessful, negotiations with trade unions.

It wants a pay freeze and cuts to mileage allowances and other benefits to help make multi-million-pound savings in its budget.

Compulsory redundancies would be a last resort, the council said, but unions warned other councils could find themselves in similar positions.

With the UK government drawing up big cuts in public spending – due to be unveiled in the autumn – the Assembly Government, which provides a sizeable chunk of local government funding, is facing a cut of up to £2bn over the next four years.

Councils could put up council tax to plug some of the gap, but even that politically-unpalatable option would still leave most needing to make savings.

Unison regional organiser Eddie Gabrielsen said: “They are talking about serving notice on 7,000 people saying they are going to employ them on lesser terms and conditions, with major wage cuts right across the board.

“What they weren’t prepared to do was give an assurance that this was going to bring improved job security... what is in it for our members? They are being asked to take pain now for what reason?”

The union, which represents around 3,000 staff at the authority, is holding two emergency meetings next week, one in Port Talbot and one in Neath. The GMB, UCATT and Unite also have members affected by the dispute.

Mr Gabrielsen added: “The other problem is that the council is still prepared to tell Joe Public they can manage the situation, instead of saying there are major repercussions for service delivery. We’re expecting that this is a similar view we’re going to see too frequently in [other] councils.”

Many of the workers directly affected were low-paid, he said, including carers.

The council needs to fill a gap in its budget of £24m by 2014, and plans to reduce its workforce by around 750 full-time posts – although Unison suggests this figure is closer to 1,000.

In a letter to staff seen by the Western Mail, the council says the public spending climate represents “an unprecedented emerging situation, and reinforces the need for NPT Council, and all others in Wales, to take decisive and speedy action.”

It says it wants to avoid compulsory redundancies, but adds: “This requires the support and co-operation of the trade unions. This has not yet materialised to date in any meaningful way”.

Graham Jones, the head of human resources at Neath Port Talbot, told reporters: “We are not at war with the unions. We will continue to have discussions as we have been.

“This is not about dismissing people – it’s about keeping them in employment. We don’t want to make anyone compulsorily redundant.”

Aberavon MP Hywel Francis said: “Everyone recognises that the deep financial crisis locally and nationally needs to be addressed but it should be done by consent.

“I urge the council leaders and the unions to give priority to both protecting frontline services and job security and arrive at some honourable compromise. Megaphone negotiations via the media are not helpful.

“The council has an excellent public service and industrial relations record over the years and I am sure would not wish to have a major fall-out with all their staff and their unions, which in turn have a reputation of working harmoniously and loyally with the public sector.”